Diverse @en - Societate de avocatură București - Vlănțoiu & Asociații

Romania, an Attractive Business Destination for Foreign Investors

Andreea Vlantoiu — Wed, 07 Mar 2018 15:07:07 +0000

A governmental measure effective from January 1^st 2018 is doubling the ceiling up to which a legal entity may subscribe as a micro-enterprise, from EUR 500.000 to EUR 1 million.

The micro-enterprise is the friendliest company in terms of taxation, given a very low tax rate: the tax rate is 1% of the turnover, in case the company has at least one employee, or 3%, for companies with no employees. As final costs, whoever wants to set up his business in Romania, as a micro-enterprise, should consider a 5% percentage as dividend tax, which, added to the maximum of 3% tax rate, leads to a 8% percentage as final maximum taxation.

Romania benefits from a standard 19% VAT rate which applies to micro-enterprises with revenues over RON 222.000 (EUR 88.500 at the conversion rate on the day of its accession, i.e. lei 3.3817 for one Euro), but this ceiling it is estimated to increase to RON 300.000, according to a draft legislative act.

The last impediment in the way of those that want to benefit from reduced taxation has been removed with the latest legislative change. Thus, the Government has dropped the classical banning on certain areas of micro-enterprise activities, such as: consultancy and management, banking, insurance and reinsurance, capital markets, gambling, development and exploitation of oil reserves and natural gas.

Setting up a company in Romania has become very attractive to foreigners for a couple of reasons:

Low taxation rate – a maximum 8% in turnover and dividend tax, applicable including to more “touchy” areas such as consultancy and gambling and a standard 19% in VAT rate;

No typical off-shore problems – Romania is not a tax haven in a negative way and setting a company in Romania is not going to be accompanied by the fiscal problems of an off-shore company.

Minimum bureaucracy – a micro-enterprise is set up in 3 days and reporting the taxation to the turnover means that no expenses shall be justified, as in the situation of income taxpayer companies.

Cheap but qualified workforce with a good level of English; the labor cost is about 5 euro / hour, compared to an average of 25 euro in the EU; Consultancy, management, gaming and IT companies are the main winners – all are areas where the expenses that can be legally justified are small in relation to revenues, as there are no acquisitions of goods, so the tax on profit remains high. Taxation of 1 or 3% on turnover is an excellent opening for such companies, as well as for any kind of company whose activity is in the services field.

The New Law of Volunteering

Andreea Vlantoiu — Thu, 02 Oct 2014 19:25:32 +0000

Law no. 78/2014 on the regulation of volunteering in Romania entered into force on July 26^th 2014, when the previous rules in this area, namely Law no. 195/2001, were expressly repealed.

The new law aims at aligning Romania with the European standards in this area, in the context of the very low degree of involvement of the local population in volunteering projects as revealed by statistical data. A number of essential changes of interest to organizations and volunteers have been implemented for this purpose.

One of the most important changes is the recognition of volunteering as work and/or professional experience, provided it is carried out in the volunteer’s area of study. It seeks to motivate young people to carry out such activities during their studies, considering that volunteering work will later be a real advantage in the job market.

On the other hand, it is important to note that volunteering as work experience is not equivalent to seniority and it is not included in the social security or pension system. Therefore, if volunteers are not students or employees, they shall be required to pay their own health insurance.

Another novelty is the introduction of the obligation to conclude a written volunteer agreement in Romanian language between the organisation and the volunteer.

By comparison, the previous law gave the parties the possibility to decide whether to conclude a volunteer agreement or not, depending on the nature of the volunteering work.

In order to co-opt volunteers the organizations will publish requests expressing their availability in this regard and will have the right to reject the offers from applicants according to their own statutory provisions, but in compliance with the principle of equal opportunities and equal treatment (namely without discrimination). In addition to the volunteer certificate, the content of which is now more strictly regulated, upon completing the activity the organization shall provide the volunteer with a report specifying the activities carried out, the tasks undertaken and the skills acquired by the volunteer.

The novelties of interest also include the possibility to organize volunteering activities outside Romania, the joint and several liability of the organization together with the volunteer for damages caused to third parties, the decrease of the time limit for unilateral termination of the volunteer agreement from 30 days to 15 days, the exemption of the organization from the obligation to conclude an accident and sickness insurance contract, the regulation of the cases of termination of volunteer agreements, etc.